RALEIGH, North Carolina (Reuters) —
U.S. Federal Reserve policymakers will likely discuss another $10
billion reduction in the monthly pace of bond buying at their next
meeting, said a senior Fed official on Friday, who warned against
reading too much into a weak jobs report for December.

Richmond Federal Reserve President Jeffrey Lacker said it would take
a "couple of quarters" of bad news to change the U.S. economy's
improving trend.

The Fed last month announced it would cut its bond-buying stimulus
by $10 billion to $75 billion each month, citing progress in the
labor market, and Lacker said he expected another such reduction
would be on the table at the next meeting on January 28-29.

"I would expect a similar reduction in pace to be discussed at the
upcoming meeting," Lacker told reporters after a speech to a
business group.

The government on Friday said nonfarm payrolls grew just 74,000 in
December, far less than in the prior two months, but economists
largely blamed frigid temperatures in large areas of the country for
the lackluster report.

Although he said he had not seen the details of the jobs report,
Lacker said one data point would not change policymakers' view.

"It takes a lot more than one labor market report to be convincing
that the trend has shifted and in my experience one employment
report rarely has an effect by itself on monetary policy," said
Lacker, who has been an opponent of bond buying from its start.

In a speech to the Greater Raleigh Chamber of Commerce, he said a
recent pick-up in U.S. economic growth was encouraging, although he
expected the pace of expansion to ease this year to closer to 2
percent.

POTENTIAL HEADWINDS

Fiscal policy, a downshifting in household spending and a reluctance
by business to hire and invest would all dampen growth, he said,
urging lawmakers to act quickly to fix long-term budget imbalances.

New healthcare rules also needed to be watched carefully given the
potential impact on hiring plans, especially for small business, and
general uncertainty about their implementation.

"I think the Affordable Care Act is something that we are watching
very closely because it's something that could well have a
substantial economic impact," he said.

Some policymakers have expressed concern about inflation running
persistently below the Fed's 2 percent target. On a measure closely
followed by the Fed, annual inflation is just 1.1 percent.

Lacker said he was confident inflation would move back towards 2
percent in the next year or two but added: "This is not a certainty,
however, and I believe the FOMC will want to watch this closely,"
referring to the policy-setting Federal Open Market Committee.

The Richmond Fed president also played down a drop in interest rate
futures prices, which is having the effect of pulling forward the
market's timeline for the Fed's first rate hike.

"My sense is that markets have a good solid appreciation of the
committee's likely reactions with regard to interest rates," he
said, noting that forward guidance had been strengthened just last
month.

"I interpret changes in the forward curve as reflections of changes
in expectations about growth and other determinants of short-term
interest rate setting by the committee."

Lacker also said the Fed would have to think carefully about other
policy options, including changing the rate banks are paid on excess
reserves, which some policymakers have suggested cutting.

"I think we have to sort out what are our options there and evaluate
what a good path forward could be, and I expect us to be paying some
attention to that in the months ahead," he said.